Guest house advice
As a tourist destination, South Africa’s natural beauty and cosmopolitan heritage make it one of the premier destinations in the world. For this reason, there are many accommodation establishments in the country, and people sometimes immigrate to South Africa with the intention of buying and running such an establishment. This page focuses on what to look at during the process.
Firstly, you need to obtain a South African Business Permit. In order to obtain the Business Permit, you need to formally register your company. This may sound like doing things backwards, but company registration in South Africa is a relatively simply procedure. At the same time, you will need to draw up a comprehensive business plan, which you will need to submit with your application for the Business Permit.
Of course, you can also trade as yourself, as the owner of the guest house. In South Africa, this type of business ownership is known as a “sole proprietor” (where it involves only one person) or a “partnership” (where it involves more than one person). A sole proprietorship does not have to be formally registered. Deciding on the right kind of business structure is important, and it may be easier to apply for other things, such as a Business Permit and bank finance, if you are registered as a company.
Once you have arranged the paperwork, you can actually purchase the desired property. Sometimes, people do not only operate a property as an accommodation establishment, but also live on the premises, so make sure that the property you choose is entirely suited to your needs.
In South Africa, the price of a property is not fixed. The process of sale usually involves price negotiations, and this is where it helps to have a dedicated estate agent on board. The agent should know what you should be paying for a property in a specific area. When making an offer for a property, you complete a document known as the “offer to purchase”. This document is then legally binding.
You should also investigate the municipal “zoning” of the property, and make sure that the property has been “zoned” for commercial purposes by the local municipality. Non-compliance with municipal zoning can lead to trouble if the neighbours take issue with what you are doing on the property. In fact, if you are in transgression of zoning regulations, your business can be shut down entirely, so make sure that you do proper homework on this aspect of the process.
Obtaining finance for a property purchase in South Africa typically involves approaching a bank for a home loan (mortgage). In applying for a loan, your business plan will be essential.